Citation Nr: 0300872
Decision Date: 01/15/03 Archive Date: 01/28/03
DOCKET NO. 02-10 988 ) DATE
)
)
On appeal from the
Department of Veterans Affairs Regional Office in St.
Louis, Missouri
THE ISSUE
Entitlement to waiver of recovery of an overpayment of
pension benefits in the calculated amount of $5316.
REPRESENTATION
Appellant represented by: Missouri Veterans Commission
ATTORNEY FOR THE BOARD
W. R. Steyn, Counsel
INTRODUCTION
The veteran had active military service from November 1942
to May 1943.
This appeal arises before the Board of Veterans' Appeals
(Board) from an October 2001 St. Louis, Missouri Regional
Office (RO) decision by the Committee on Waivers and
Compromises (Committee), which denied the veteran's
request for waiver of recovery of an overpayment of
pension benefits in the amount of $5,316.
FINDINGS OF FACT
1. During the period from November 1, 1998 to October 31,
1999, the veteran was service connected for a single
disability evaluated as 30 percent disabling, but was paid
non-service connected pension benefits at the housebound
rate, since that was the greater benefit.
2. Pension benefits are calculated based on income and in
October 1998, the veteran had gambling winnings in the
amount of $1875, which he failed to report to the RO.
3. The veteran's gambling winnings resulted in an
overpayment of pension benefits for the income year
November 1, 1998 to October 31, 1999, which the RO
calculated as $1883.
4. A reduction of $1883 in benefits during the year from
November 1, 1998 to October 31, 1999 would result in
payments to the veteran at a rate which is below the rate
of compensation to which the veteran was entitled due to
his service connected disability.
5. As a result of his gambling winnings, the veteran's
pension should have been reduced by only $1318, the
difference between the rate at which non-service connected
pension benefits were paid, and the amount of service
connected compensation benefits paid at the 30 percent
rate during that period.
6. In November 2001, the RO erroneously mailed the
veteran a check in the amount of $3745, under the mistaken
belief that the veteran was underpaid pension benefits by
this amount between November 1999 and October 2001.
7. Of the $3745 sent to the veteran, he was entitled to
$312 resulting in an overpayment of $3433.
8. There is a report of contact in the claims folder
showing that the RO called the veteran telling him not to
cash the $3745 check in question; the veteran asserts that
the RO never called him.
9. The veteran has monthly income of $1873 and monthly
expenses of $1901.
CONCLUSIONS OF LAW
1. The criteria for a partial waiver of recovery of the
overpayment at issue in the amount of $3998 ($3433 + $565)
have been met. 38 U.S.C.A. § 5302 (West 1991 & Supp.
2002); 38 C.F.R. § 1.965 (2002).
2. Recovery of the remainder of the overpayment at issue
in the amount of $1318 would not violate the principles of
equity and good conscience. 38 U.S.C.A. § 5302 (West 1991
& Supp. 2002); 38 C.F.R. § 1.965 (2002).
REASONS AND BASES FOR FINDINGS AND CONCLUSIONS
Background
In June 1971, the RO awarded the veteran non-service
connected pension benefits.
By a March 1994 rating decision, the veteran was granted
special monthly pension at the housebound rate under
38 C.F.R. § 3.351 (d) (1). In the letter adjusting the
veteran's pension award, he was instructed to report any
changes in his income to VA, and that failure to do so
might result in the creation of an overpayment in his
account.
In June 1999, the veteran was assigned a 30 percent
disability evaluation for his service connected
disability, effective from May 1996.
By a December 2000 rating decision, the veteran was
granted special monthly pension based on the need for aid
and attendance effective August 17, 2000.
In September 2001, the RO wrote to the veteran that it had
learned he had received gambling winnings from Casino
White Cloud. It asked the veteran to verify the amount he
had received for the years 1998, 1999, 2000, and 2001. It
informed the veteran that his pension benefits had been
amended by different amounts for November 1998, December
1998, December 1999, and December 2000. The veteran later
verified that his gambling winnings of $1875 had been
received on October 31, 1998, and that he had not received
other gambling winnings. When the difference between the
amount of pension benefits paid and the amount of pension
benefits owed (taking into account the veteran's gambling
winnings) for the one-year period beginning November 1,
1998 and ending October 31, 1999, was computed by the RO,
the resulting amount was $1883.
In November 2001, the RO erroneously issued the veteran a
check in the amount of $3745 under the mistaken belief
that the veteran was underpaid pension benefits by this
amount between November 1999 and October 2001. Of this
amount, the RO found the veteran was entitled to $312,
representing benefits owed for September 2001 and October
2001. Thus, the overpayment created by this action was
$3433 ($3745 - $312), and the calculated overpayment in
its entirety is the sum of $1883 and $3433, or $5316.
As to the check issued in November 2001, the RO was
apparently able to have it returned by the bank to which
it was sent, but shortly thereafter, the RO issued another
check to the veteran in the same amount. A report of
contact dated November 20, 2001, reflects the RO called
the veteran and told him to return the check in question.
The veteran, however, apparently kept these funds.
In a financial status report dated October 2001, the
veteran listed Social Security income of $533, and total
monthly expenses of $989. The veteran attached a letter
from White Cloud Casino that the veteran won $1875 on
October 31, 1998, and that this was the only W2G on file
for him since their opening in 1998.
Subsequently, the veteran submitted another financial
status report in April 2000. On it, he listed monthly
income of $1873, including $545 in Social Security, and
$1328 in VA pension income. He listed monthly expenses of
$1801, including $335 in monthly car payments, and $700 in
medical assistance payments.
In the veteran's April 2002 notice of disagreement, he
wrote that his condition had deteriorated to the point
where he had hired someone to help with dressing, shaving,
bathing, and getting to the bathroom. He wrote that this
person cooked for him and made certain that he took his
medication at the proper time. He stated that he was on
oxygen and that this person made sure that it was
operating correctly. He stated that this person
transported him everywhere he went, and that he had agreed
to pay him $700 per month. He wrote that without this
person's assistance, he would be forced to go into a
nursing home.
In a July 2002 statement, the veteran wrote that his in-
home health care attendant quit, and that he had replaced
him with someone who charged him $800 per month. He wrote
that his medical expenses had increased by $100 per month
on July 14, 2002, because of the new person that he had
hired.
Analysis
After reviewing the facts and circumstances of this case,
there is no indication of fraud, misrepresentation or bad
faith on the part of the appellant in the creation of the
overpayment. This does not mean that the veteran may not
be found at fault in its creation, but merely indicates
that the acts which led to its creation do not meet the
high degree of impropriety as to constitute fraud,
misrepresentation or bad faith. See 38 C.F.R. § 1.965(b)
(2002).
To dispose of this matter on appeal, it must be determined
whether the recovery of the overpayment would be against
the principles of equity and good conscience, thereby
permitting waiver under 38 U.S.C.A. § 5302(a) (West 1991)
and 38 C.F.R. §§ 1.963(a); 1.965(a) (2002).
The regulation provides that the standard of "equity and
good conscience" will be applied when the facts and
circumstances in a particular case indicate the need for
reasonableness and moderation in the exercise of the
Government's rights. 38 C.F.R. § 1.965(a) (2002). In such
a determination consideration will be given to elements
which include the degree of fault of the debtor; a
balancing of fault between the debtor and VA; whether
recovery of the overpayment would cause undue financial
hardship to the debtor, or result in unjust enrichment;
whether repayment of the debt would defeat the purpose for
which it was intended; and whether there was a change in
position to one's detriment, so that reliance on VA
benefits resulted in relinquishment of a valuable right or
incurrence of a legal obligation. 38 U.S.C.A. § 5302 (West
1991); 38 C.F.R. § 1.965 (2002).
The analysis in this case will be split into 2 separate
sections: whether the recovery of the overpayment
calculated as $3433 can be waived, and then whether the
recovery of the overpayment calculated as $1883 can be
waived.
Regarding the $3433 overpayment, the first and second
criteria in 38 C.F.R. § 1.965 are the degree of fault of
the debtor and a balancing of fault between the debtor and
VA. Since the VA erroneously mailed the veteran the check
in question (after inexplicably concluding the veteran had
been underpaid benefits by that amount), the VA must bear
a large degree of the fault in the creation of the
overpayment. The veteran is at fault in the sense that
there is a report of contact dated November 20, 2001,
indicating that the veteran was called and told not to
cash the check issued to him. However, the veteran
disputes this version of events. He alleged in June 2002
that he called VA and was told that he was entitled to
cash the check in question. He alleges that VA could not
have called him because he did not have a phone in
November 2001. Thus, in assessing the level of fault to
be assigned to the veteran and the VA, it is determined
that the veteran bears some of the degree of fault, but
this level of fault is largely mitigated because of VA's
errors creating the overpayment of $3433.
Having assessed the various levels of fault, the Board
turns to the appellant's ability to repay the debt. The
regulatory standard for hardship is "whether collection
would deprive debtor or family of basic necessities." 38
C.F.R. § 1.965 (a)(3). Expenses not necessary to the
health and well-being of the appellant are considered to
be discretionary, and thus available to repay debts,
including those to the government. For the reasons
described below, it is determined that undue financial
hardship would indeed result from requiring the appellant
to repay the debt.
In his April 2002 financial status report, he listed
monthly income of $1873 and monthly expenses of $1801,
including $700 in medical assistance payments. However,
in June 2002, the veteran indicated that his medical
payments had increased by $100, which would increase his
expenses to $1901. Since the veteran has a $28 deficit in
his monthly balance, it is determined that having to pay
the overpayment of $3,433 would cause undue financial
hardship for the veteran.
As to the other aspects of equity and good conscience, it
can be argued that there would be unjust enrichment in
this case if the appellant did not repay the debt,
inasmuch as he received benefits to which he was not
entitled. However, it can also be argued that recovery of
the debt (even in reasonable monthly installments) would
defeat the purpose for which the benefits were intended,
in the sense that the benefits were intended to help
veterans of limited means, and the veteran has monthly
expenses greater than income. The appellant has not
claimed to have relinquished a valuable right or to have
changed his position by reason of having relied on the
erroneous benefits. No other factors which would preclude
recovery of the overpayment as against equity and good
conscience have been put forth.
In weighing all of the elements of equity and good
conscience, the element of fault on the part of VA as well
as the financial hardship that would be caused by
recoupment of the debt outweigh the elements which are not
in the veteran's favor. Accordingly, it is determined
that recovery of the $3,433 would be against equity and
good conscience. Therefore, waiver of recovery of that
part of the overpayment is warranted.
Regarding the overpayment of the remaining $1883, it is
noted initially that this amount seems to have been
erroneously calculated. The RO determined the amount of
the overpayment based on the amount that the veteran was
actually paid for the one-year period beginning November
1998 ($4699), and subtracted from this figure the amount
that the veteran was owed for the one-year period. In
determining the amount that the veteran was owed, the RO
calculated how much his pension benefits would have been
reduced by taking into account his gambling winnings.
However, it is noted that the veteran has a service-
connected disability rated at 30 percent. He would have
been entitled to either his service-connected disability
payments or his reduced pension payments, whichever would
have been greater. In this case, for the one-year period
beginning November 1998, the veteran's service-connected
disability payments ($3381) would have been greater than
his reduced pension benefits ($2816). For this reason,
the veteran's disability payments of $3381 should have
been the figure that the RO used when it figured the
amount that the veteran was owed for the one-year period
beginning November 1998. When this figure is subtracted
from $4699 (the amount that the veteran was actually paid
for the one year period beginning November 1998), an
overpayment of $1318 is obtained rather than $1883, a
difference of $565.
Clearly, the veteran is entitled to his service connected
disability compensation payments, and therefore waiver of
recovery of this $565 of the calculated overpayment of
$1883 must be granted. As to the remaining $1318, in a
March 1994 letter from VA regarding the veteran's pension,
he was specifically notified to inform VA if his income
changed. As the veteran did not inform VA when he won his
October 1998 casino winnings, the degree of fault lies
squarely with the veteran in the creation of the $1318
overpayment.
Regarding possible undue hardship, notwithstanding the
veteran's listing monthly expenses of $1901 and monthly
income of $1873, it can not be concluded that having to
pay the overpayment of $1318 would cause undue financial
hardship for the veteran. This is because the veteran's
debt balance apparently has already been reduced to the
point beyond the $1318 overpayment. The fact that the
debt in question has already been recovered is also an
argument against the idea that recovery of the debt (even
in reasonable monthly installments) would defeat the
purpose for which the benefits were intended.
As to the other aspects of equity and good conscience,
there would be unjust enrichment in this case if the
appellant did not repay the debt. The amount he received
for his pension was predicated on the amount he received
from other sources, and the veteran would be unjustly
enriched were he able to keep the $1318. The appellant
has not claimed to have relinquished a valuable right or
to have changed his position by reason of having relied on
the erroneous benefits. No other factors which would
preclude recovery of the overpayment as against equity and
good conscience have been put forth.
As noted above, the degree of fault in the creation of the
$1318 overpayment lies squarely with the veteran. He was
told to report any income changes to VA and he did not do
so. The veteran does not question the degree of fault
regarding the $1318 overpayment.
In weighing the standards of equity and good conscience
under 38 C.F.R. § 1.965, the question of fault is assigned
great weight since there is no ambiguity about who was at
fault. For that reason, the preponderance of the evidence
shows that recovery of the portion of the overpayment in
the amount of $1318 would not be against the principles of
equity and good conscience. Accordingly, to this extent
the appeal is denied.
In reaching this decision, which in sum waives recovery of
$3998 of the calculated overpayment of $5316, the Board
notes that the RO may have already reduced the overpayment
amount at issue by $565, once it was realized it was
inappropriate to have reduced the veteran's benefit
payments in 1998/1999 below the rate paid for his service
connected disability. (See July 2002 letter to the
veteran from the RO.) Indeed, other information contained
in that letter reflects that another "adjustment" was made
to the veteran's award of benefits over the period at
issue. Although this adjustment may have had the effect
of further reducing the overpayment at issue, the matter
certified on appeal for the Board to resolve was one
concerning the originally calculated overpayment in the
amount of $5316. In this decision, the Board waives
recovery of $3998 of that $5316 amount, and any
adjustments in the veteran's benefits should be calculated
based on this determination.
ORDER
Waiver of recovery of $3998 of the calculated overpayment
in the amount of $5316 is granted.
Waiver of recovery of $1318 of the calculated overpayment
in the amount of $5316 is denied.
MICHAEL E. KILCOYNE
Acting Member, Board of Veterans' Appeals
IMPORTANT NOTICE: We have attached a VA Form 4597 that tells
you what steps you can take if you disagree with our
decision. We are in the process of updating the form to
reflect changes in the law effective on December 27, 2001.
See the Veterans Education and Benefits Expansion Act of
2001, Pub. L. No. 107-103, 115 Stat. 976 (2001). In the
meanwhile, please note these important corrections to the
advice in the form:
? These changes apply to the section entitled "Appeal
to the United States Court of Appeals for Veterans
Claims." (1) A "Notice of Disagreement filed on or
after November 18, 1988" is no longer required to
appeal to the Court. (2) You are no longer required
to file a copy of your Notice of Appeal with VA's
General Counsel.
? In the section entitled "Representation before VA,"
filing a "Notice of Disagreement with respect to the
claim on or after November 18, 1988" is no longer a
condition for an attorney-at-law or a VA accredited
agent to charge you a fee for representing you.